NZD/USD – Close Open Orders

Close Open Orders: 2008-10-20 10:00

Since my post, NZD/USD made a high around .6350, then dropped and remains in a range between .6050 – .6200. It does not look like we’ll get much action from this pair right now as uncertainty rules the market, so I will close my open orders and search for opportunities elsewhere.

Close Open Orders. No Trade.

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Trade Idea: 2008-10-14 13:56

comdollsff

Greetings! It looks like we have a possible short opportunity forming on NZD/USD. We’re currently seeing a boost higher in risk across the board in currencies on new bailout plans from across the world, so is this another opportunity to short a correction?

Longer term I like a short on this play because even though the new bailout plans may bring back buyers and confidence in the short term, it doesn’t fix the outlook that we are heading into a recession. This means slow to negative growth and less demand for commodities – a large component of New Zealand’s exports. Also, continued de-leveraging of carry trades should bring more selling of higher yielding currencies and more flow back into funding and safe haven currencies like the US Dollar.

On the chart, I used the Fibonacci tool to pick out potential entry levels on a correction. Today the pair strongly reacted to the 38% Fibonacci area and turned lower. I feel that this is just one test as we can see bullish divergence in the stochastics as there are higher “lows” vs. lower “lows” in price. So, we may see the pair move higher before it drops down again. I’d like to short around the 50% Fib area if the pair makes it that far. I’m going to use a wide stop of 200 pips, so I’ll definitely have to cut down my position size to stay within my 1% risk per trade limit. Here’s what I’m going to do:

Short NZD/USD at .6400, stop at .6600, pt1 at .6200, pt2 at .6000

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

Stay tuned for updates!

  • camelman

    Doll, I always see how you and other posters waiting 100, 200, 300 pips to get into a position. My question is why can’t we get long now till .6400 and then short around that area? Thanks for your response

  • camelman

    Doll, I always see how you and other posters waiting 100, 200, 300 pips to get into a position. My question is why can’t we get long now till .6400 and then short around that area? Thanks for your response

  • happypip

    Hey cameman! The reason is I’m not sure if it will go higher. There’s no certainty in trading, and at the point when I wrote this post I didn’t know whether the pair will travel higher or lower. But based on my analysis and opinion, I felt a short on the pair has a better probability of profit, and that I could get into my short position at a better price if I was correct. I would rather the market come to me, rather than try to chase the market….does that make sense?

  • happypip

    Hey cameman! The reason is I’m not sure if it will go higher. There’s no certainty in trading, and at the point when I wrote this post I didn’t know whether the pair will travel higher or lower. But based on my analysis and opinion, I felt a short on the pair has a better probability of profit, and that I could get into my short position at a better price if I was correct. I would rather the market come to me, rather than try to chase the market….does that make sense?

  • camelman

    Understood happypip …. too bad it only made it to .6350 because someone took the bottom from under it :)(.6068)

  • camelman

    Understood happypip …. too bad it only made it to .6350 because someone took the bottom from under it :)(.6068)

  • Anaiya

    Good Call happy pip. You are looking to maximise profits and that is the key in this market at the moment. Over the past few weeks I have played my hand at chasing prices up and down and have come off second best.

  • Anaiya

    Good Call happy pip. You are looking to maximise profits and that is the key in this market at the moment. Over the past few weeks I have played my hand at chasing prices up and down and have come off second best.